GI Innovation, which has drawn attention for aggressive research and development (R&D) investment in new drugs, received a report card far from the performance targets presented at the time of its listing as the timing of generating results was pushed back. Given the accumulated losses and small sales base, the market sees this year's technology export results as a watershed that will determine the company's future value and survival.
According to the pharmaceutical and bio industry on the 12th, GI Innovation is accelerating technology exports this year around its core pipelines. As performance improvement has been delayed since listing, the assessment is that it is time to prove business outcomes with visible contract results beyond simple R&D progress.
In particular, the market's attention is focused on the fact that, depending on whether a technology transfer contract is signed, not only short-term cash inflows but also the possibility of a mid- to long-term revaluation of corporations' value could diverge.
◇ Performance since special technology listing "insufficient"… buying time with cash
GI Innovation, which listed on KOSDAQ in 2023 through a special technology listing, spends far more than half of sales on R&D. The structure has concentrated funds on expanding new drug pipelines and clinical development rather than revenue generation.
At the time of listing, the company presented 148.6 billion won in sales and 92.6 billion won in operating profit for 2024. But the actual report card was very different. Sales in 2024 came to 24.28 million won, and operating loss was 48.2 billion won. The sales achievement rate versus the target was just 0.0016%, and losses continued. As of the cumulative third quarter last year, sales were tallied at 338.1 million won, with an operating loss of around 33.4 billion won.
With losses accumulating for two consecutive years, the deficit is also continuing to grow. The extremely limited sales base is also cited as a burden. GI Innovation, a special technology listing corporations, still has a grace period on sales requirements until 2027, but some note that if performance improvement is delayed, the possibility of being designated as an issue for administrative guidance cannot be ruled out.
In the short term, the company has defended liquidity by raising capital. In Mar. last year, it secured about 110 billion won in operating funds through a paid-in capital increase, and it maintained cash-like assets by adjusting the clinical costs and R&D labor expenses planned at the time of the capital increase.
In addition, in Oct. last year it received 5.5 billion won in technology fees from Yuhan Corporation under an existing technology transfer contract, and in Nov. it sold all 294,985 shares of Y-Biologics it held to secure an additional 8.1 billion won. According to the company, as of early this year, cash-like assets available for operation are about 100 billion won.
◇ "No issues with core pipelines"… the key is technology transfer results
The company is seeking a rebound through the return of management and stronger R&D. In Apr. last year, founder Jang Myeong-ho returned as CEO and is directly leading the recovery of the company's growth.
Some in the market also say GI Innovation's corporations' value is undervalued. If technology transfer results for core pipelines become visible, there are expectations that both performance and the stock price could be re-evaluated.
A representative case is the allergy treatment "GI-301." The company believes this substance has the potential to surpass Novartis' global blockbuster allergy treatment "XOLAIR." XOLAIR's annual sales amount to about 5 trillion won.
GI Innovation transferred GI-301 to Yuhan Corporation in July 2020 in a deal worth a total of 1.4 trillion won, and a domestic phase 2 clinical trial is underway under the name "Resigercept." Then in Oct. 2023, it also completed a technology export to Japan's Maruho worth about 320 billion won.
GI Innovation and Yuhan Corporation are also pushing to additionally transfer GI-301 to other global pharmaceutical companies in the future. If a deal is reached, revenue will be split 50-50 between the two companies.
The immuno-oncology pipelines "GI-101" and "GI-102" are also mentioned as candidates for technology export. In 2020, the two candidates signed a joint clinical agreement with Merck (MSD), and combination trials with MSD's immuno-oncology drug "Keytruda" are underway.
Earlier, in 2019, GI Innovation transferred these candidates to China's Simcere in a deal worth a total of 1.146 trillion won. With phase 2 trials expected to start in China this year, the possibility of additional milestone revenue is also being discussed.
The industry believes that since last year GI Innovation has been in final-stage talks with several global pharmaceutical companies, including MSD, over technology transfer of GI-101 and GI-102.
The two candidates are validating antitumor efficacy as monotherapy or in combination with Keytruda. If a contract is reached, it will be the first case of a domestic biotech venture transferring immuno-oncology technology to a global big pharma. The industry expects visible results within this year. CEO Jang Myeong-ho also set a goal of obtaining U.S. Food and Drug Administration (FDA) approval for GI-102 by the first half of 2028.
GI Innovation is also continuing new pipeline research with antibody-based new drug developer Y-Biologics. Y-Biologics listed on KOSDAQ in 2023, and GI Innovation invested 5 billion won in equity before listing in 2020, realizing an appraisal gain of 1.7 billion won in about five years.
Speculation arose about a halt in collaboration over the equity recovery, but a company official said, "Cooperation with Y-Biologics at the preclinical stage is proceeding smoothly," and explained, "The equity sale was to secure cash given the company's characteristics of heavy R&D investment."